Sale of Goods Act Bangladesh: Implied Terms, Title, Risk and Remedies in 2026

Sale of Goods Act Bangladesh: how the 1930 Act works in 2026

The Sale of Goods Act Bangladesh traders rely on is almost a century old and still decides most of what happens when a consignment of yarn, steel, machinery or medicine changes hands. Act No III of 1930 sets out when a contract of sale exists, which promises are conditions and which are warranties, what quality the law implies, when ownership and risk move to the buyer, how delivery and acceptance work, and what an unpaid seller can do with goods still in its hands or in transit.[1] It replaced the sale chapter of the Contract Act 1872, which is now marked repealed by section 65 of the 1930 Act.[2]

This guide explains the Act as it operates in commercial practice in 2026: formation, conditions and warranties, the implied terms, property and risk, delivery, the unpaid seller's rights, and the remedies on breach. It then deals with cross-border sales, where Bangladesh's position outside the UN Convention on Contracts for the International Sale of Goods makes the choice of law decisive, with how Incoterms and the Act fit together, with the consumer overlay, and with drafting supply contracts that hold up in the new Commercial Courts.

Summary: The Sale of Goods Act 1930 governs every contract for the sale of movable goods in Bangladesh. It implies conditions of title, correspondence with description, merchantable quality and fitness for purpose unless the contract excludes them; passes property when the parties intend and risk with property unless agreed otherwise; gives an unpaid seller a lien, a right of stoppage in transit on the buyer's insolvency and a limited right of resale; and allows suits for the price or damages. Bangladesh is not a CISG party, so cross-border contracts need an express governing law.

Key point: Under section 26, risk follows property unless the parties agree otherwise, while Incoterms allocate risk by delivery point. A contract that uses an Incoterm but is silent on when ownership passes can leave title and risk in different hands, which matters most when goods are lost, seized or the buyer becomes insolvent.[1]

At a glance

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Table of Contents

What the Sale of Goods Act Bangladesh covers

The Act applies to contracts of sale of goods. Goods means every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass and things attached to or forming part of the land that are agreed to be severed before sale or under the contract.[1] The same definition is borrowed by other statutes: the Competition Act 2012 defines goods by reference to section 2(7) of the 1930 Act.[3]

Sale and agreement to sell

Section 4 defines a contract of sale as one by which the seller transfers or agrees to transfer property in goods to the buyer for a price. Where property passes immediately it is a sale; where it is to pass later or on a condition it is an agreement to sell, which becomes a sale when the time elapses or the condition is met.[1] The distinction is not academic. It decides who bears loss, who can sue for the price and who ranks where if one side becomes insolvent.

Relationship with the Contract Act 1872

The Sale of Goods Act is a specialist code that sits on the general law of contract. Offer, acceptance, consideration, capacity, free consent and the measure of damages still come from the Contract Act 1872. Section 73 of that Act gives compensation for loss that arose naturally from the breach or that the parties knew was likely to result, but not for remote or indirect loss, and section 74 limits recovery under a stipulated sum to reasonable compensation not exceeding that sum.[2] Our overview of contract law in Bangladesh covers those general rules.

What falls outside

Land and buildings are not goods, nor are debts and other actionable claims. Contracts for work and materials, software licences and services need careful classification. If the essence of the bargain is the transfer of a finished article, the Act will usually apply; if it is the skill and labour, it may not. Draft for the uncertainty by stating expressly which quality and acceptance regime governs.

Formation, price and time under the Act

A contract of sale is made by offer and acceptance and may be in writing, oral, partly each, or implied from conduct, subject to any other law.[1] Most Bangladeshi trade disputes therefore begin with a fight over which documents form the contract: a pro forma invoice, a purchase order, a sales confirmation, an LC application or an email chain. The party that wants its terms to govern must make them part of the offer or acceptance, not send them after the goods.

Existing, future and perished goods

Goods may be existing or future, and a present sale of future goods operates as an agreement to sell.[1] A contract for specific goods that, unknown to the seller, had already perished when the contract was made is void, and an agreement to sell specific goods is avoided if they perish without fault before risk passes.[1] These rules matter for agricultural commodities and goods held in bonded warehouses.

Price

The price may be fixed by the contract, left to be fixed in an agreed manner or determined by the course of dealing; otherwise the buyer pays a reasonable price, which is a question of fact.[1] Price adjustment clauses linked to exchange rates or published indices are common in import contracts and are enforceable if the mechanism is clear.

Time

Under section 11, stipulations as to time of payment are not of the essence unless the contract shows otherwise, and whether other time stipulations are of the essence depends on the contract.[1] A buyer that wants to terminate for late shipment, or a seller for late payment, should say expressly that time is of the essence for that obligation.

Conditions and warranties under the Sale of Goods Act Bangladesh

Section 12 draws the distinction on which most remedies turn. A condition is a stipulation essential to the main purpose of the contract, breach of which entitles the other party to treat the contract as repudiated. A warranty is collateral to the main purpose, and breach gives only a claim for damages, not a right to reject the goods. Whether a term is a condition or a warranty depends on construction, and a term may be a condition even if the contract calls it a warranty.[1]

When a condition becomes a warranty

Section 13 lets a buyer waive a condition or treat its breach as a breach of warranty. More importantly, where the contract is not severable and the buyer has accepted the goods or part of them, a breach of condition can only be treated as a breach of warranty unless the contract provides otherwise.[1] Acceptance is therefore the moment the buyer's most powerful remedy disappears, which is why acceptance and inspection clauses deserve as much care as price.

Drafting consequences

Label the terms that matter. Specifications, shipment dates, certificates of origin and regulatory approvals can all be made conditions expressly. Equally, a seller may want minor documentary terms classed as warranties so that a buyer cannot reject a full cargo for a trivial discrepancy.

The implied terms: title, description, quality and fitness

The implied terms are where the Sale of Goods Act Bangladesh does its most important work, because many contracts are silent on quality.

Title and quiet possession

Section 14 implies a condition that the seller has the right to sell, or will have it when property is to pass, and warranties of quiet possession and freedom from undisclosed charges or encumbrances.[1] Buyers of second-hand machinery or vehicles should check for bank hypothecation and leasing interests, because a registered charge in favour of a lender is exactly the encumbrance that defeats quiet possession.

Description and sample

Section 15 implies a condition that goods sold by description correspond with the description, and where sale is by sample as well as description the bulk must match both. Section 17 implies, in a sale by sample, that the bulk will correspond with the sample in quality, that the buyer will have a reasonable opportunity to compare, and that the goods will be free from defects rendering them unmerchantable that a reasonable examination of the sample would not reveal.[1] Keep sealed counter-samples, with signed labels, for every approved sample in garments, chemicals and food.

Merchantable quality and fitness for purpose

Section 16 starts from caveat emptor: there is no implied condition as to quality or fitness except as the section provides. Where the buyer makes known the particular purpose so as to show reliance on the seller's skill or judgment, and the goods are of a kind the seller supplies in the course of business, there is an implied condition that they are reasonably fit for that purpose. Where goods are bought by description from a dealer in such goods, there is an implied condition of merchantable quality, but not as to defects that an examination actually made ought to have revealed.[1]

Three details trip up buyers. The fitness condition does not apply to the sale of a specified article under its patent or trade name. Usage of trade can add implied terms. And an express warranty does not displace an implied one unless the two are inconsistent.[1] The statutory standard in Bangladesh remains "merchantable quality", so supply templates imported from jurisdictions that use different quality tests should be adapted before use.

Excluding implied terms

Section 62 allows any right, duty or liability implied by law to be negatived or varied by express agreement, by course of dealing, or by usage binding both parties.[1] Section 62 contains no reasonableness test, so a clearly drafted exclusion between merchants should be expected to apply as written. A buyer that accepts a seller's standard "as is" terms may have given away every implied condition.

Passing of property and risk under the Sale of Goods Act Bangladesh

Ownership and risk are separate concepts, and the Act links them by default but not inevitably.

When property passes

No property passes in unascertained goods until they are ascertained. For specific or ascertained goods, property passes when the parties intend, judged from the contract terms, their conduct and the circumstances.[1] Sections 20 to 24 supply default rules: in an unconditional contract for specific goods in a deliverable state, property passes when the contract is made even if payment or delivery is postponed; where the seller must do something to put the goods into a deliverable state or to weigh or measure them to fix the price, property passes once that is done and the buyer has notice; and for unascertained or future goods, property passes on unconditional appropriation of conforming goods with the other party's assent.[1]

Delivery to a carrier and reservation of disposal

Delivery to a carrier for transmission to the buyer, without reserving a right of disposal, is deemed unconditional appropriation.[1] Section 25 lets a seller reserve the right of disposal until conditions such as payment are met, in which case property does not pass despite delivery to the buyer or a carrier, and where a bill of lading makes goods deliverable to the seller's order the seller is prima facie taken to have reserved the right.[1] This is the statutory basis for retention-of-title clauses and for documentary sales under letters of credit.

Retention of title has limits

A retention-of-title clause binds the parties to the contract, not the world. In January 2025 the High Court Division's admiralty bench vacated the arrest of bunkers on a vessel at Mongla sought by a party claiming against a sub-charterer, holding that bunkers cannot be arrested independently of the ship and that a contractual lien in a bunker sale contract is at best a contractual lien that does not bind a non-party.[10] Sellers relying on title retention should pair it with security that works against third parties, such as an LC, a guarantee or registered security.

Risk

Section 26 provides that, unless otherwise agreed, goods remain at the seller's risk until property passes and are then at the buyer's risk whether or not delivered. Where delivery is delayed by either party's fault, the party at fault bears loss that would not otherwise have occurred.[1] Section 39(3) adds that, where goods go by a route involving sea transit in circumstances in which insurance is usual, the seller must give the buyer enough notice to insure, failing which the goods are at the seller's risk during the sea transit.[1]

Sales by non-owners

A buyer generally takes no better title than the seller had. The Act protects good-faith buyers in defined cases, including sales by a mercantile agent in possession with the owner's consent acting in the ordinary course of business, and sales by a seller or buyer left in possession of the goods or documents of title.[1] Purchasers from distributors and trading houses should document their good faith and the seller's apparent authority.

Delivery, examination and acceptance

Under the Sale of Goods Act Bangladesh, it is the seller's duty to deliver and the buyer's to accept and pay, and unless otherwise agreed delivery and payment are concurrent conditions.[1] Apart from contract, goods are delivered where they are at the time of sale, and a seller bound to send goods with no fixed time must do so within a reasonable time.[1]

Wrong quantity and mixed goods

If the seller delivers less than contracted, the buyer may reject; if it accepts, it pays at the contract rate. If the seller delivers more, the buyer may accept the contract quantity and reject the rest, or reject the whole. If contract goods are mixed with goods of a different description, the buyer may accept the conforming goods and reject the rest, or reject all. These rules yield to usage, special agreement or course of dealing.[1] Tolerance clauses, such as plus or minus five per cent at seller's option, are common in bulk trades for exactly this reason.

Examination and acceptance

A buyer that has not examined the goods is not deemed to have accepted them until it has had a reasonable opportunity to do so, and the seller must allow examination on request. A buyer is deemed to accept when it says so, when it does an act inconsistent with the seller's ownership after delivery, or when it keeps the goods beyond a reasonable time without intimating rejection.[1] A buyer that rightly rejects need not return the goods; notice of rejection is enough.[1]

Practical consequences

Processing, reselling, cutting or installing goods will usually be an act inconsistent with the seller's ownership. Buyers of components and raw materials should therefore inspect before consumption, record defects with photographs and third-party survey reports, and reject in writing promptly. Sellers should set a short contractual inspection window after which goods are deemed accepted, which converts a later quality complaint into a damages claim rather than a rejection.

The unpaid seller's rights against the goods

The Sale of Goods Act Bangladesh treats a seller as unpaid when the whole price has not been paid or tendered, or when a bill of exchange or other negotiable instrument taken as conditional payment has been dishonoured. "Seller" includes a person in the position of a seller, such as an agent to whom the bill of lading has been endorsed.[1] Section 46 gives the unpaid seller, even after property has passed, a lien while in possession, a right of stoppage in transit on the buyer's insolvency and a limited right of resale; where property has not passed, an equivalent right to withhold delivery.[1]

Lien

The seller in possession may retain the goods until payment where they were sold without credit, where credit has expired or where the buyer becomes insolvent, even if the seller holds them as the buyer's bailee. After part delivery the lien continues over the remainder unless the circumstances show waiver.[1] The lien is lost on delivery to a carrier without reserving the right of disposal, when the buyer lawfully obtains possession, or by waiver, but not merely because the seller obtained a decree for the price.[1]

Stoppage in transit

Where the buyer becomes insolvent, an unpaid seller that has parted with possession may resume possession while the goods are in transit and keep them until payment.[1] Transit lasts from delivery to the carrier until the buyer or its agent takes delivery, and it ends early if the buyer obtains delivery before destination or the carrier attorns to the buyer at destination. Whether goods loaded on a ship chartered by the buyer are held by the master as carrier or as the buyer's agent depends on the facts.[1] The right is exercised by taking possession or by notice to the carrier, which must then redeliver at the seller's expense.[1]

Speed is everything. Once the buyer collects from the port or the carrier acknowledges holding for the buyer, the right is gone. Sellers dealing with buyers in financial difficulty should keep the shipping line's contact details and a template stoppage notice ready before the vessel arrives in Chattogram or Mongla.

Sub-sales and documents of title

The lien and stoppage right survive a buyer's sub-sale unless the seller assented, but they are defeated where a document of title has been transferred to the buyer and the buyer transfers it to a good-faith purchaser for value; a pledge for value takes priority to the extent of the pledgee's rights.[1] In LC transactions, the bank that holds the bill of lading as security is usually that pledgee.

Resale

Exercising a lien or stoppage does not by itself rescind the contract. Where goods are perishable, or the seller gives notice of intention to resell and the buyer does not pay within a reasonable time, the seller may resell and recover its loss from the original buyer, who cannot claim any profit. Without notice the seller cannot recover damages and the buyer keeps any profit. The resale buyer gets good title either way, and an express resale clause rescinds the original contract on resale without prejudice to damages.[1] Always serve the resale notice in writing; it costs nothing and preserves the damages claim.

Remedies for breach of a contract of sale

Chapter VI of the Sale of Goods Act Bangladesh sets out the suits available to each side, supplemented by the Contract Act's rules on damages.[1] [2]

Seller's remedies

• Suit for the price: where property has passed and the buyer wrongfully fails to pay, or where the price is payable on a fixed day regardless of delivery.[1]
• Damages for non-acceptance: where the buyer wrongfully refuses to accept and pay.[1]
• Storage and loss: where the buyer fails to take delivery within a reasonable time after request, it is liable for the seller's loss and a reasonable charge for care and custody.[1]

Buyer's remedies

• Damages for non-delivery: where the seller wrongfully fails to deliver.[1]
• Specific performance: for specific or ascertained goods, at the court's discretion and subject to the Specific Relief Act 1877.[1]
• Breach of warranty: set the breach off against the price or sue for damages, and still sue for further loss after a set-off.[1]
• Rejection: for breach of condition, provided the goods have not been accepted.[1]

Anticipatory breach and interest

If either party repudiates before the delivery date, the other may keep the contract alive until that date or treat it as rescinded and sue at once.[1] The court may award interest on the price to the seller from tender or the due date, and to the buyer on a refunded price from the date of payment, at such rate as it thinks fit, absent contrary agreement.[1] A contractual interest rate avoids leaving that figure to the court. Before suing, serve a formal demand; our guide to the legal notice in Bangladesh sets out the practice.

Where disputes are heard

Commercial disputes now have a dedicated forum. The Commercial Court Ordinance 2026 was gazetted at the start of January 2026, listing at least 24 categories of commercial dispute, including the export or import of goods and the transportation of goods, and directing that trial conclude within 90 days of being taken up for final hearing.[7] Parliament enacted it as the Commercial Courts Act 2026, Act No 23 of 2026, dated 10 April 2026.[6] In May 2026 the Law Minister acknowledged gaps in the Act and promised amendments, citing a World Bank figure of 1,442 days to enforce a contract.[8] Our analysis of the Commercial Courts Act covers procedure.

International sales, the CISG and Incoterms

Bangladesh is not a party to the UN Convention on Contracts for the International Sale of Goods. The Convention has 97 parties, including China, Singapore, the United States, Japan, Germany, Türkiye and Viet Nam, but not Bangladesh or India.[4] The practical effect is that Bangladeshi importers and exporters cannot assume a uniform code applies. Their contract is governed by whatever law the parties chose or the forum's conflict rules select, which may be the Sale of Goods Act Bangladesh, English law, or the CISG, which can apply when the rules of private international law lead to the law of a Contracting State or when the parties choose it.[11]

Why the governing law clause matters

The CISG and the 1930 Act are built differently. Under the Convention an aggrieved party may require performance, claim damages or avoid the contract for fundamental breach, and the Convention excludes consumer sales.[11] The 1930 Act instead turns on conditions, warranties and acceptance.[1] A Bangladeshi buyer contracting on a foreign supplier's standard terms, governed by the supplier's law, may therefore find its rejection rights measured by a different test from the one it expected. Choose the governing law deliberately, and if you choose the law of a contracting state but do not want the Convention, exclude it expressly.

Incoterms and the Act

The ICC's Incoterms 2020 comprise eleven three-letter rules that allocate costs, risks and obligations between seller and buyer; DAT was renamed DPU in the 2020 revision.[5] They are contractual terms, so they displace the Act's default risk rule only to the extent incorporated, and they do not deal with when property passes. An Incoterm may put transit risk on the buyer from shipment, yet under section 25 property may remain with a seller who holds the bill of lading to its order until payment.[1] State the Incoterm with its version and named place, and add a separate title clause. Our guide to Incoterms in Bangladesh explains the rule-by-rule choices.

Letters of credit

Bangladeshi imports are commonly financed by documentary credits, which operate independently of the sale contract. A bank pays against compliant documents even if the goods are defective, so quality protection must come from the sale contract, inspection certificates and, where needed, a performance guarantee. See our analysis of letters of credit in Bangladesh.

The consumer protection overlay

The Sale of Goods Act Bangladesh applies equally to consumer and business sales, but consumers have an additional administrative route. Under the consumer rights law, a consumer may complain to the Directorate of National Consumer Rights Protection within thirty days of the cause of action, without a fee, in person, online or through the 16121 hotline, and a complainant receives 25 per cent of any fine realised.[9]

What it means for sellers

The consumer route does not replace the civil claim under the Act, but it moves faster and carries reputational cost. Retailers and online marketplaces should align returns policies with the implied conditions, keep purchase records, and respond to complaints within the hearing timetable. An exclusion clause that may be effective between merchants is a poor defence in a consumer complaint. Our guide to e-commerce law in Bangladesh covers online sales.

Drafting supply contracts that work

A well-drafted supply contract uses the Sale of Goods Act Bangladesh where it helps and displaces it where it does not. The sequence below is the one we use.

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Clauses that do the heavy lifting

• Specification and conditions: attach technical specifications and state which obligations are conditions.
• Inspection and acceptance: fix a window, a method and an independent surveyor for disputes.
• Title and risk: separate clauses, cross-referring to the Incoterm.
• Payment security: LC, guarantee or advance payment, with interest on late payment.
• Exclusions and caps: express, conspicuous, and consistent with any warranty given.
• Force majeure: defined events, notice and termination after a long-stop period.
• Law and forum: governing law, CISG position, and arbitration or court.

Our guide to the supply agreement in Bangladesh covers distribution, agency and competition issues, and our analysis of breach of contract in Bangladesh covers claims.

Default rules and how to vary them

The table summarises the Act's main default rules and the usual contractual response. On a phone, scroll it sideways.

Every one of these defaults can be varied by express agreement under section 62.[1] The commercial risk lies not in the Act itself but in forgetting that it applies whenever the contract is silent.

Common mistakes and what to watch

• Relying on purchase orders: battle-of-forms disputes are decided on which terms formed the contract.
• Accepting by using: processing goods before inspection usually ends the right to reject.[1]
• Assuming Incoterms pass title: they allocate risk and costs, not ownership.[5]
• Ignoring the CISG: a foreign seller's law may import it.[4]
• Silent resale: reselling without notice forfeits the damages claim.[1]

Looking ahead, the Commercial Courts Act amendments promised in May 2026 and the planned reform of the Arbitration Act 2001 will shape where sale disputes are decided and how fast.[8] The substantive rules in the 1930 Act are not under active review, so careful drafting remains the main protection.

TRW's commercial contracts practice drafts and negotiates supply, distribution and sale agreements, and our international trade practice advises importers and exporters on cross-border terms and disputes. To discuss a contract or a claim, contact TRW in Dhaka.

Frequently asked questions

What law governs the sale of goods in Bangladesh?

The Sale of Goods Act 1930 (Act No III of 1930), with the Contract Act 1872 supplying general contract rules. The Act replaced the sale chapter of the Contract Act.[1] [2]

What is the difference between a condition and a warranty?

A condition is essential to the main purpose and its breach allows the buyer to treat the contract as repudiated; a warranty is collateral and its breach gives only damages.[1]

Which terms does the Act imply into a sale?

Conditions of title, correspondence with description, merchantable quality and fitness for a made-known purpose, conditions in sales by sample, and warranties of quiet possession and freedom from encumbrances.[1]

Can implied terms be excluded?

Yes. Section 62 allows them to be negatived or varied by express agreement, course of dealing or binding usage.[1]

When does ownership pass to the buyer?

When the parties intend. Absent a different intention, sections 20 to 24 apply; for specific goods in a deliverable state under an unconditional contract, property passes when the contract is made.[1]

Who bears the risk if goods are lost?

Unless otherwise agreed, risk passes with property, and a party whose fault delays delivery bears the resulting loss. Incoterms commonly vary this.[1] [5]

What can an unpaid seller do?

Exercise a lien while in possession, stop goods in transit if the buyer becomes insolvent, resell after notice, and sue for the price or damages.[1]

Is Bangladesh a party to the CISG?

No. Bangladesh is not among the Convention's 97 parties, so cross-border contracts should state their governing law and their position on the Convention.[4]

Where are sale of goods disputes heard in 2026?

Import, export and other commercial disputes fall within the Commercial Courts Act 2026, Act No 23 of 2026, unless the contract provides for arbitration.[6] [7]

Can consumers complain outside the courts?

Yes. A complaint may be made to the Directorate of National Consumer Rights Protection within thirty days, free of charge, and the complainant receives 25 per cent of any fine realised.[9]